The FCC, under the leadership of Tom Wheeler, is seeking to force the pay TV industry to open up the services provided to consumers through operator owned and managed set-top boxes. In particular, Mr. Wheeler wants to see the operators provide open interfaces to three key elements of pay TV service:

Service discovery: Information about what programming is available to the consumer, such as the channel listing and video-on-demand lineup, and what is on those channels.

Entitlements: Information about what a device is allowed to do with content, such as recording.

Content delivery: The video programming itself.

Mr. Wheeler’s goal is to make it easier for consumers to integrate all the video services they use:

When consumers are able to access all their content – from MVPD programming to streaming video – in a single place, they will be better able to find and enjoy the programming most relevant to them”

The FCC open pay-TV initiative, if enacted, will open the floodgates to radical change in the delivery of television services. For example, a CE vendor like Apple would have the information and the access necessary to deliver on their promise of “reinventing the television experience” from a device like Apple TV. And because the access mechanism is open and standard, the company can deliver a single box nationally that would work with all cable companies.

Needless to say, the majority of pay TV operators are violently against the proposal, as well they might be. This issue is critical to them because it defines who controls the experience of television, where consumers still spend much of their quality viewing time.

The television landing page, where consumers start their entertainment journey, is the most influential of all positions in entertainment. It defines which services a consumer sees first when they want to watch something, where they rent or buy a movie, and how they can add a premium TV channel. Today, for most people, the pay TV operator controls those decisions.

Unlocking pay TV services from the set-top box will give vendors like Apple, Google, Amazon, Samsung or Roku a shot at assuming control of the television landing page. And if that happens, pay TV could lose all the additive transactional and premium channel revenue they have long enjoyed.

SVOD providers like Hulu and Netflix would also benefit from the FCCs action. Companies like Hulu and Netflix want to appear on operator set-top boxes because it exposes more people to their services and makes them easier to use (as they appear on the primary TV input and can be driven with the operator TV remote.) Netflix and Hulu are both talking with operators and have begun to appear on a limited number of operator devices, but progress has been very slow. For example, Hulu’s CEO Mark Hopkins has been talking with operators about getting on the STB since 2013. To date, just one major operator, Cablevision, has agreed to do this.

An open pay TV STB platform is just about ideal for SVOD providers. It avoids the need to negotiate with MVPDs, and allows them to stand side-by-side with pay TV as a peer service.

nScreenMedia has been urging the pay TV industry to open up the set-top box for some time. As we have pointed out, this approach allows them to create an integrated view of television entertainment for their customers, and helps keep pay TV services front and center in their lives.

It is inevitable that pay TV services will be forced, either through market forces or legislative action, to open up to the IP world. Going forward, the only real question MVPDs have to answer is whether the set-top box and television landing page has their brand on it, or a Roku or Apple logo.

Why it matters

The FCC is looking to force pay TV operators to open up their services and set-top box to the IP world.

This could result in pay TV operators losing control of the television landing page (or TV guide,) which would be a disaster for them.

However, it is inevitable that pay TV services will open up to the IP world. Either market forces or legislative action will force the issue.

(6) Comments

Hard to say specifically, John. FCC is very light on specifics. It sounds like they are talking about a downloadable security scheme, so that’s one big difference with cablecard. Another is they want cable TV services to be available through “standards based” interfaces. The idea seems to be that if retail STB makers support the standard, they can deliver the cable content. Hence, Roku, Apple TV etc. could add cable support to their streaming media players. Previously only cablecard devices could deliver the cable broadcast channels, and they couldn’t get at VOD content. This restricted the usefulness of third party devices like TiVo, for example, giving the operator DVR the upper hand.
As Anthony says in his comment, this is a complicated business and we are a very long way away from anything specific happening.

We have seen this initiative in the Europe with a Universal STB idea in the past – It is unrealistic and to think that the simplification of services is a landing page – SI specifications, Scheduling, Rights & Meta Data, Advertising etc. is part of the issue … its a complex world under the hood of TV… different if you offer a single VOD catalogue to the market from a single source.

No one has filled that void of a universal UX capable of working across all devices and platforms irrespective of region, service, or what goes on “under the hood” or “behind the curtain” as it were. Consumers only care about access and transparency; everything, everywhere, on any device. While the FCC must wrestle with the politics and players, it’s ultimately just a stall tactic to allow those with a current stake in the game to “reinvent” or deal with the consequences. Meanwhile, Apple, should be readying their long-rumored entry as the gatekeeper for all media!

Conversely this could be an opportunity for many operators to improve their video business. TiVo has shown that operators that deploy a compelling user experience that embraces OTT content like Netflix can increase the perceived value of their video proposition to consumers. Most operator can’t afford to keep up with the R&D that Apple and Netflix will spend on user experience and reach to new devices. Cox for example abandoned its OCAP/RDK effort, Charter is still trying to deploy their own UI, etc. And thus if operators now have choices from vendors like TiVo who can aggregate the R&D spend across multiple pay TV operators via a standardized technology it may help increase their pay TV service value without having to create their own development team, or take only what the largest operators created for themselves.

Excellent point, Joe. The cost aspects of the shift to hybrid are a big problem for operators. So, as you say, if they’re able to leverage standard hardware after implementing the FCC mandate it could be a big money saver. The only problem is that it will take years for the details to be worked out. Who knows where we’ll be by then.